Wednesday, April 26, 2017

“All the best people left banking years ago”

I'm not sure why it does but the headline reminds me of some 1920's socialite coming in to work from Long Island on their commuter yacht. Here's a later vision/version of the species, 1937's "POSH":

From eFinancialCareers:

If you’re a young person starting in banking now, you might expect to
find an industry replete with the wisdom amassed from various financial
crises and filled with brilliant battle-worn managers. You could be
disappointed. The way a lot of senior bankers tell it, the best people
are long gone. All that remain are journey-men going about their
business with neither fire nor flair.

“A lot of people who had successful careers – the most talented
people of my generation – have left the industry to do other things,”
said Kerim Derhalli, the ex-Deutsche MD who himself has exited banking to run Invstr, a
social network for amateur investors, when we spoke to him earlier this
year. “The people who are hanging on are getting paid less every year
as margins and volumes collapse. Their incomes are falling and their
lifestyles are having to adjust, but they stay because they’re still
getting paid much more than they would doing a comparable job in a
different industry.”

It’s a harsh appraisal and one that some say applies more to European
than to U.S. banks. At Goldman Sachs, for example, the argument runs
slightly differently – there are complaints that the three co-heads of the securities division, Pablo
Salame, Isabel Ealet and Ashok Varadhan, became partners long before
the financial crisis and should cede to new blood. By comparison, at the
European banks which were burned by events in 2008, departing bankers
complain that a generation of bureaucrats has taken control.

“European banks today don’t like entrepreneurs,” says a managing
director who recently left Credit Suisse’s equities business after a
career spanning two decades. “The people in charge are the chief
operating officers and the accountants, not the dealmakers and the
traders.” He says John Cryan, CEO of Deutsche Bank and a former CFO of
UBS, is typical of this new regime: “It’s all about a safe pair of
hands. Banks are being run by the people who were historically in the
number two positions.”

Years of cost cutting haven’t helped. In their zeal for extracting
expenses from the industry banks stand accused of mindlessly hacking the
senior ranks. At Credit Suisse, Tim O’Hara,
the former head of the markets business and an ex-COO of the fixed
income division, allegedly had a policy of ditching 25% of the most
senior people and cutting the balance sheet by a similar proportion.
“This doesn’t work,” argues the ex-MD. “It makes more sense to keep the
productive senior staff and to maximize profits for the growing
regulatory cost base.”

To make matters worse, departing bankers argue that today’s junior
recruits are less capable than yesterday’s. “When I went into banking
[in 2000] my graduate class was comprised of the best students from the
best universities in the world,” said Chris Yoshida, the former global head of rates sales at Deutsche Bank who’s now promoting the Kairos Society,
an organization that helps young entrepreneurs change the world. “This
is no longer the case – the very top students now want to work for
Google and Facebook. Banks are attracting the students who are in the
top 50% to 75% [instead of the top 25%].”...MORE